KEY POINTS:
Childcare centre operator Kidicorp has cut its trading profit forecast in the face of higher wage costs due to a Government plan to require half of all preschool teachers to be qualified.
The trading profit forecast (earnings before interest, tax, depreciation and amortisation) for the year ending March 31 was scaled back to $3.6 million yesterday, compared to the previous forecast of $4.8 million and last year's result of $4 million.
However, chief executive Wayne Wright said the NZX-listed company was still on track for predicted trading profit of $6.6 million in 2008 and $8.7 million in 2009.
"We just see this as a one-time blip where we were caught with [a] horrendous escalation in wage costs and we just didn't feel that it was the right thing to do to have an interim price increase," Wright said.
The wage rise and subsequent profit warning reflected the Government's plan to ensure half of all childhood education centre teachers had a recognised qualification, he said.
The Government originally set a deadline for the end of last year, but this had been pushed back to December 31 this year.
"As the December deadline loomed more and more teachers were either being poached or head-hunted and to retain our qualified teachers meant paying more."
This pressure had eased somewhat when the Government put its deadline back and with more teachers qualifying this year, Wright said.
Fees at many of the company's 80 centres nationwide had not been increased in more than a year, while a small rise in wage costs could have significant impact upon the bottom line.
A full review of fees would be undertaken, Wright said.
"This is usually done in March but as a result of the review it is likely that fee increases will be monitored more regularly to take account of the increased costs of operating."
The company felt positive about the sector in light of plans by the Government to offer 20 hours of free childcare to parents, Wright said.
"We think it is good for children and parents and we anticipate it improving our total occupancy."
Kidicorp would soon open in Manukau the first of several Children's Campus' aimed at toddlers and primary school-age children.
New centres had also recently opened in Palmerston North and Napier, with a planned opening at St Lukes, Auckland, in April and work due to get under way at Papamoa.
"While the population continues to grow and the Government wants to see more children in early childhood education there is unfilled demand for quality care and education in many locations," Wright said.
